E-Commerce

E-commerce players clearing the inventory as February 1 approaches fast

E-commerce companies have been hit hard by the new FDI policy. There are a lot of things they have to reconsider before they plan for the upcoming year. The companies are in a panic state and are fighting for the date to be extended. The new FDI policy is supposed to take effect from February 1, 2019, and it is only a couple of weeks away. Amazon India had to literally shut down its food-retail business in which it had recently invested around $500 million.

Flipkart also has to reconsider all of its plans. It is facing a lot of struggle anyway because of high profile exits and of course because of the new management at the helm. Amazon and Flipkart are on the same side at this moment and are fighting the government for the same reason. It takes a lot to bring two arch-rivals on one side and the Indian government has managed to do it. The companies are now sweating it out to comply with the same and are looking to comprehend with the government’s decision.

The new FDI policy doesn’t allow the e-commerce platforms to sell the products of the companies they themselves own or have a stake in. It also doesn’t allow the companies to sell more than 25% of a product online which is a loss for e-commerce players. Apart from this, the e-commerce companies cannot get exclusivity such as OnePlus only sells on Amazon.in and no other platform is allowed to sell. So it is a loss-loss situation for e-commerce players and that has given rise to another sale happening currently.

All the e-commerce players including Amazon and Flipkart are offering insane sales on their platforms. They have termed it under the Republic Day sale that is fast approaching. However, everyone has figured out the real reason for the sale and it has nothing to do with Republic Day. It is FDI policy that has sent the companies into a frenzy. The discounts offered are huge and the consumers are digging it as long as it goes on.

There are massive 70% discounts on every category. The discounts are 3%-5% higher than the Diwali sale or the ‘Big Billion Sale’ but the consumers don’t care. While the senior people of smartphone-based companies which sell their products online believe that the e-commerce players are clearing their inventory. That means this is nothing but a clearance sale. That is happening because the online retailers are failing to know if the date is going to be shifted or not and hence the discounts and sale.

There are massive discounts on products which have zero offline presence and this suggests a pattern. This tells us that it is nothing but a clearance sale. Apart from this, the e-commerce players are offering to add on discounts if the consumer is paying online. There are further discounts for certain bank credit cards and also if you are paying through a certain application or a wallet.

All in all, the Republic Day sales were never this big. The discounts were never so deep and aggressive and it is not just Amazon or Flipkart but both of them with other players such as Myntra and Snapdeal are also offering discounts. This is odd if we look at the timing of the sale. That said, the sale is supposed to go on for a week until Republic Day arrives on 26th of January. It is Diwali in January for all the consumers and they surely are cashing in on it.

-Unmesh Phule

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